Oil prices edge higher as Middle-East tensions fail to ease

Oil prices edged higher on Tuesday after hopes of a ceasefire between Israel and Hamas were dampened following a statement by Benjamin Netanyahu about a potential invasion of the Rafah enclave in Gaza.

According to a report, Netanyahu stated on Monday that a date has been set for the invasion of Rafah which dampened the earlier optimism of a potential ceasefire between Israel and Hamas following a round of discussions.

Futures of Brent crude, the global benchmark, were trading at $90.74/barrel during Tuesday morning trade, up from the lows of $89.73/barrel on Monday. West Texas Intermediate futures were trading at $86.55/barrel, up from the lows of $85.45/barrel on Monday.

The report also pointed out that Hamas had said Israel’s proposal did not meet any of its demands but it would study them before responding to mediators.

Tensions between Israel and Iran are also not helping ease oil prices as Israeli embassies across the world have been reportedly placed under high alert following fears of Iranian attacks on their diplomats. The tensions come in the wake of an Israeli airstrike on an Iranian consulate building in Syria’s capital city Damascus that left seven Revolutionary Guards and six Syrians dead.

The market is now keenly eyeing inflation data out of the United States and China that would give signals regarding economic growth in two largest oil consumers in the world.

Indian OMCs under pressure amid rising oil prices

Shares of Hindustan Petroleum Corp Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL) and Indian Oil Corporation Ltd (IOC) were trading 0.3% lower on Monday morning. According to a report, every $1 increase in crude prices could dent the margins of oil marketing companies by 30-40 paise per litre.

Meanwhile, India’s fuel demand for the fiscal year rose 5% to a record high of 233.276 million tons compared to 223.021 million tons a year earlier, driven by higher automotive fuel and naphtha sales, a report said.